Wednesday, December 8, 2021

Sunak promises to make the UK the world’s first net-zero financial center

- Advertisement -
- Advertisement -


Ambitious plans to create a huge pool of money to invest in a green future will make Britain the “world’s first net-zero financed financial center,” Rishi Sunak said.

Activists warned, however, that the Chancellor’s landmark plan is not what is needed to stop the climate crisis, and it only risks “green washing” an industry that has benefited massively from decades of pollution.

Mr Sunak was faced with calls for financial watchdogs to be given legal powers to enforce commitments from more than 450 companies from across the financial industry to align their investments with the Paris Agreement climate goals.

And Greenpeace UK said Mr Sunak was coming to the Cop26 Summit in Glasgow with “a marketing slogan” in place of the transformative action needed for the financial sector.

The group’s policy leader, Rebecca Newsom, said, “The world’s first net-zero-funded financial center would be one where financial institutions and corporations are legally required to balance their lending and investments with the global goal of capping warming 1.5 ° C.

“Instead, these new rules seem to give financial institutions a lot of leeway to carry on as usual instead of rewiring the system as the Chancellor claims. The Chancellor again falls short of what the climate emergency requires. “

When convening the largest ever meeting of finance chiefs on climate change on Wednesday, the Chancellor will make a fresh push to decarbonise the City of London, stating that it is “Britain’s responsibility to lead the way” in order to “rewire the whole thing “. global financial system for net zero ”.

Under the proposals, UK financial institutions and publicly traded companies will introduce new requirements for the publication of transition plans detailing how they will adapt and decarbonise as the UK moves towards a net-zero economy by 2050.

A task force for the transition plan, made up of leading representatives from industry and science, regulatory authorities and civil society groups, will set a “gold standard” for transition plans to protect against greenwashing.

The initiative came after Boris Johnson told the Cop Summit that a “major shift in power” was imminent as consumer pressures and financial institution decisions lead to divestments in companies involved in deforestation and pollution.

Companies that commit to green policies will “pay a democratic consumer price” if they break their pledges, the prime minister said.

The director of the UK Center for Greening Finance and Investment, Dr. Ben Caldecott, called Mr Sunak’s announcement “huge” and said it would “fuel demand for green finance and accelerate decarbonization, not just in the UK but wherever British companies do business”. .

And the managing director of the Green Finance Institute, Dr. Rhian-Mari Thomas said it was “the day green finance reached critical momentum,” with “unprecedented” sums now being used to transition from a fossil fuel economy.

“The task ahead now is to work together in a radical collaboration to unlock investment opportunities quickly and on a large scale so that we can steer this wall of capital into real economic outcomes that will not only position Britain as the world’s first net-zero financial center, but also delivers a just and resilient net-zero world economy, “said Dr. Thomas.

However, experts said the new pledges are so weak that city banks, fund managers and insurers can increase the amount of fossil fuels they fund.

As part of the deal brokered by the former Governor of the Bank of England, Mark Carney, of the Glasgow Financial Alliance for Net Zero (GFANZ), banks do not have to cut their financing for climate-damaging investments in the short term. Instead, they can deliver on their commitment by reducing the “carbon intensity” of their lending.

The weakened requirement means that a bank or mutual fund could borrow money for new gas-fired power plants while reducing funding for coal, thereby reducing carbon intensity, although scientists now largely agree that all new fossil fuel investments must be stopped if the average temperature rise is to be kept below 1.5 ° C.

“Over $ 130 trillion in assets under management and not a single rule preventing a dollar from investing in the expansion of the fossil fuel sector,” said Lucie Pinson, CEO of Reclaim Finance.

“The financial sector is once again ready to inflate itself with hot air commitments instead of the specific cuts in oil, gas and coal financing that we really need.”

The plan is weakened by the fact that the signatories, according to the Greens, “can mark their homework themselves”.

“They may give themselves a smug A *, but global citizens are giving them a big fat mistake while continuing to fund the very industries that drive us to destruction,” said former MEP Molly Scott Cato.

Bank lobbying groups also played a key role in developing the guidelines to which they are now committed, according to research by the Corporate Europe Observatory (CEO).

The CEO, who is following the Brussels lobbying, noted that the Net Zero Banking Alliance, a group led by some of the world’s largest financiers of fossil fuel projects, including JP Morgan and Europe’s leading coal investor Barclays, made important contributions to Mr. Carney-led research.

CEO researcher Kenneth Haar said: “What we are seeing here is basically a privatization of important parts of international climate policy.

“Even if a financial company continues to invest heavily in fossil fuels, which it will do without strict regulation, it can still be actively included on the UN agenda on private finance and climate change. Unfortunately, the upcoming Cop26 seems to be the biggest financial greenwash event in history. “

And Brid Brennan, a researcher at the Transnational Institute (TNI), said: “While global popular demand for governments has demanded a decisive retreat from the brink of climate change, corporate financiers and polluters are pursuing a strategy of privatizing the UN system and are now positioned in order to prevent any substantial disinvestment of fossil fuels and instead implement a major greenwash bonanza for companies. “

The E3G climate change think tank said introducing mandatory net-zero transition plans was “a big step forward” and said the work of the new task force will be “instrumental” in ensuring that all publicly traded companies and financial institutions Set high standards – quality plans.

- Advertisement -
Latest news
- Advertisement -
Related news
- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here